A Nudge Toward Formulary Changes

We wrotelast week about a major price-cut announcement from a leading U.S. based biotechnology company—a move that fits perfectly with the Trump administration’s agenda of reducing drug prices and particularly lowering out-of-pocket costs to consumers through free-market competition.

But the newsthat Amgen was cutting the list price by 60% of one of its newest biologics, Repatha, got buried in the avalanche of news coverage about the administration’s own plans to try to use the levers of government controlto force the reduction of Medicare prices for many drugs administered by physicians. This feels like an alternative universe. (More on that in a subsequent post.)

Amgen announced it was immediately making Repatha available at a reduced list price of $5,850 a year, down from about $14,500 a year, saying the move “will improve affordability by lowering patient copays, especially for Medicare patients.”

Repatha treats patients who have excessively high levels of cholesterol, including those who do not respond to traditional statins, and who therefore are at a high risk of heart attacks and strokes. It is a new class of PCSK9 inhibitors that dramatically lower cholesterol levels in patients.

By creating new, significantly lower list pricing, patients who pay a share of the list price through co-insurance can see immediate savings and therefore have greater access to the treatment.

Insurance plans have been reluctant to make Repatha available because of its $14,000 cost, often requiring physicians to fill out reams of paperwork to plead for approval of the drug for their patients and putting the drug on specialty tiers on their formularies that require high out-of-pocket coinsurance. Both are high barriers to access.

Amgen says that while the company can cut its list price, it’s up to the insurers to make the drug more affordable by quickly adopting the low-cost version and moving it to a more affordable formulary tier.

“We’ll see how plans respond to Amgen’s decision to lower the list price of Repatha, in terms of both coverage now and future coverage design,” former Food and Drug Administration Commissioner Mark McClellan told us.

Express Scripts was quoted in the Amgen news release as highly supportive of the move, calling it “an important step forward.” But it is currently unclear how quickly PBMs and health plans will make a decision to alter their formularies to make the new lower-priced medicine available to patients.

The Trump administration could go a long way toward reinforcing private-sector action—and hopefully encouraging other biotech and pharmaceutical companies to follow suit—by encouraging health plans to put lower list priced drugs on more affordable tiers for patients.

If the Amgen move succeeds in improving access and affordability for Medicare patients by dramatically lowering the list price, it could be a blueprintfor other companies to follow. This is a competitive move that definitely could benefit patients.

Specialty tier drugs are generally the most expensive on a health plan’s formulary—more costly drugs that often have a limited patient population. Amgen’s dramatic reduction of the list price should bring it out of the specialty category, as defined by Medicare, and into a lower, more affordable tier.

Ideally, plans would act quickly to ensure that patients can access the lower-priced drugs by moving the medicine to a cost-sharing tier that is more affordable instead of keeping it on the specialty tier.

The problem: Pharmacy benefit managers that negotiate prices and obtain drugs for health plans generally make a higher profit from the higher price—an issue the Administration has highlighted as a priority to address.

Given the complexity of the marketplace, all stakeholders have a role to play. Amgen has made a competitive move and now it is up to the pharmacy benefit managers and the Medicare Part D plans to pull through and ensure that patients can quickly access the lower priced, more affordable medicine. But that only will happen if the drug plans do their part.

The ball is in their court.

—Grace-Marie Turner is the president of the Galen Institute, a non-profit research organization focusing on patient-centered health reform.